| Course | GF570 Portfolio Management |
|---|---|
| Unit | Unit 2 |
| Paper type | Investor profile brief |
| Length | About 560 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Finance |
| Updated | October 2026 |
Free sample paper for GF570 Unit 2
Objectives and Constraints, Each With a Source: A Unit 2 Investor Profile Brief for a Private Foundation
[Student Name]
Purdue University Global
GF570: Portfolio Management
Unit 2 Investor Profile Brief
[Instructor Name]
[Date]
The foundation, its trustees and every figure are composite; the statutes and textbook cited are real.
Background
The foundation was funded last year when the founding family sold its regional heating and air-conditioning parts distributor to a public company. It holds $184 million. Twelve percent of its assets, about $22 million, are shares of the acquirer, which the sale agreement bars it from selling for two years. Its mission is to fund vocational training in the region the business served. Five family members serve as trustees, advised by a volunteer investment committee.
Objectives
Return requirement: 7.95 percent a year. Built from three parts compounded together: the 5 percent minimum distribution federal law requires of private foundations (Taxes on Failure to Distribute Income, 26 U.S.C. § 4942, 2018), expected inflation of 2.3 percent so that grants keep their real value, and half a percent for investment and administrative costs. 1.05 times 1.023 times 1.005, less one, is about 7.95 percent. Source: statute, trustee minutes and the cost budget.
Ability to take risk: above average. The foundation's horizon is perpetual, it has no debt, and its only fixed obligation is the distribution requirement, which is based on a rolling average of assets and falls when markets fall. Source: trust deed and the statute.
Willingness to take risk: below average. In their first meeting, three of five trustees said a loss above 20 percent in a single year would lead them to reconsider the strategy. Several remember the family business's near failure in 2009. Source: trustee minutes.
Reconciling the two. Where ability and willingness differ, the profile follows the lower for the near term, because a strategy abandoned after a loss does more harm than a modestly conservative one held steadily (Maginn et al., 2007).
Constraints
Liquidity. About $9.2 million of grants and $0.9 million of expenses a year, roughly 5.5 percent of assets, must be paid in cash. Source: grant budget.
Time horizon. Perpetual, with a near-term stage of two years until the acquirer shares can be sold. Source: trust deed and sale agreement.
Taxes. Net investment income, including realized gains, is subject to a 1.39 percent federal excise tax (Excise Tax Based on Investment Income, 26 U.S.C. § 4940, 2018). Some private fund structures can generate unrelated business income that is taxed at higher rates. Source: statutes and tax counsel's memo.
Legal and regulatory. Investments must not jeopardize the foundation's charitable purposes, which requires prudent diversification, and the foundation may not hold a controlling stake in any business. Source: tax counsel's memo.
Unique circumstances. The restricted acquirer block, which cannot be sold or hedged for two years, and a trustee request to exclude tobacco and firearms makers. Source: sale agreement and minutes.
The foundation can afford more risk than its trustees will accept, and the restricted acquirer block adds risk the trustees did not choose, so the first two years of any policy must work around a concentrated holding while staying inside the trustees' 20 percent tolerance.
Next Step
The investment policy statement in Unit 3 will turn this profile into numbered rules for return, risk, liquidity and asset ranges.
References
Excise Tax Based on Investment Income, 26 U.S.C. § 4940 (2018).
Maginn, J. L., Tuttle, D. L., Pinto, J. E., & McLeavey, D. W. (2007). Managing investment portfolios: A dynamic process (3rd ed.). Wiley.
Taxes on Failure to Distribute Income, 26 U.S.C. § 4942 (2018).
The Purdue Global GF570 Unit 2 instructions
Unit 2 of GF570 asks for a profile of an institutional or individual investor organized into objectives and constraints. For objectives, build the return requirement from its components and show the arithmetic, and assess risk tolerance as two separate judgments, ability and willingness, saying how you reconcile them when they differ. For constraints, work through cash needs, the investment horizon, tax rules, legal limits and anything peculiar to this investor. Tie every statement to a source in the case, such as a document, a statute or a stated preference. Close with the central tension the profile reveals and the next step. Keep the brief compact, with clear headings. Cite the relevant laws and a portfolio management text in APA 7.
How the GF 570 Unit 2 example is put together
Background on the foundation's funding, mission and trustees opens the sample. The objectives section compounds the return requirement and names its sources, citing the federal distribution rule. Ability to take risk is rated above average from the perpetual horizon and lack of debt; willingness is rated below average from the trustees' stated 20 percent loss limit. A reconciliation paragraph follows the lower of the two, citing Maginn and colleagues. Five constraints follow, including about $10.1 million of annual cash needs, the 1.39 percent excise tax under the federal statute, legal limits on jeopardizing investments and the restricted acquirer block with a trustee request for exclusions. The highlighted sentence states the central tension, and the next step points to the policy statement.
GF570 Unit 2 rubric: what earns full points
GF570 profiles are graded on completeness, sourcing and the handling of tensions. Graders check that the return requirement is built from its components and compounded correctly, and that risk tolerance distinguishes ability from willingness. Every constraint category should appear with a source. The analytical share goes to identifying conflicts, such as high ability with low willingness, and explaining how the profile resolves them. Instructors in the MS in Finance program value attention to unusual circumstances like restricted stock, since these shape every later decision. A concise structure, accurate legal citations and APA 7 references complete the grade.
Common GF570 Unit 2 mistakes, and how to avoid them
A frequent GF570 Unit 2 error is adding the components of the return requirement instead of compounding them. Others give a single risk rating without separating ability from willingness, or rate willingness from the investor's financial position rather than from what the decision makers said. Constraints are listed without sources, so the grader cannot tell whether they come from the case. Unique circumstances, such as a restricted holding or ethical exclusions, are left out. The profile ends without naming the tension the policy must resolve. For any investor your case presents, keep the two tables, a source for each line and a clear statement of what the policy must balance.
Get a GF570 Unit 2 example written to your instructions
Hand over the GF570 Unit 2 case, the rubric and whatever template was posted; each line of the resulting profile names its source. An individual client or another institution works as well as a foundation. Delivery of the first custom sample, which is free, generally takes 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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GF570 Unit 2 questions, answered
What is the difference between an objective and a constraint?
Objectives state what the investor wants: a return requirement and a tolerance for risk. Constraints state what limits the pursuit: horizon, liquidity, legal and tax rules, and circumstances unique to the investor. The sample keeps them in separate tables and cites a fact for every line, which is how most rubrics for this unit test whether the distinction is understood.
Why compound the return requirement instead of adding?
Because spending, inflation and costs apply to a balance that is itself changing, so they multiply rather than sum. Adding gives 7.80 percent in the sample; compounding gives 7.95. The gap is small in one year and material over decades, and a grader at this level usually expects the compounded figure or an explicit note that the additive one is an approximation.
Can my profile describe an individual instead?
Yes, if the case does. The same two tables work for a household, with objectives drawn from goals and constraints from income, taxes and dates. The sample uses a foundation because its rules are written down, which makes the sourcing easy to see. The version prepared for you follows the investor your prompt describes.
Where can I find a free GF570 Unit 2 sample paper?
You can read a full GF570 Unit 2 investor profile brief for a composite private foundation here, with a compounded return requirement, ability and willingness assessed separately, five constraints and APA 7 references.
What makes the acquirer shares a unique constraint?
The sale agreement bars the foundation from selling or hedging them for two years, so about 12 percent of assets sit in one stock regardless of what the policy prefers.